“What would we do if we won a million dollars, Daddy?” Hmmm. My daughter Kara’s question was an interesting one. That evening, we just finished watching “Lottery,” a new reality show on TV. In a way, it was kind of sad to see how most people respond to large sums of money. I explained that we’d be able to pay off our mortgage, buy a few new cars, put some extra money away for their university education and take a few trips. We’d also be able to do those renovations we have been talking about, and perhaps put in an in-ground pool. Then I got thinking…it really wouldn’t be long before that lifechanging money would be gone if we did all that.
Sadly, it’s amazing how people’s lifestyles change after winning large sums of money… and more sadly a year later when they are broke and have created even more debt than before. According to statistics on the show, over one third or more of lottery winners are broke within a year, and this increases as time goes on.
One of the major challenges we see with some WSIB alternative programs is that many being offered to O/O fleets are short term in nature and offer a lump sum pay out for a catastrophic type injury. The idea is that if the O/O receives a large sum of money, usually $300,000 to $500,000 (like winning the lottery) that they should invest the proceeds in order to have enough ongoing monthly income to pay their bills until they reach retirement age.
For whatever reason, these types of policies don’t have requirements that the O/O needs to put this money away for the future. Even though an O/O may receive this lump sum, there is nothing stopping them from blowing it all in a short period of time (see lottery statistic above). If the injury was work related (i.e. truck accident ) when they run out of money, chances are they’d be heading back to their trucking company with their hand out looking for more… because they can.
As my last article has suggested, most fleets have allowed their O/O’s to opt out of WSIB, and purchase a private alternative in its place. Unfortunately, not all fleets have done everything they can to ensure the right coverage has been purchased, but more importantly maintained.
When an O/O opts out of WSIB, it does give them the right to sue. Requiring an O/O to carry a private alterative with not eliminate a lawsuit, but the more comprehensive the program and how a carrier ensures coverage is maintained certainly reduces their risk and exposure. When was the last time your reviewed your current situation? Times have changed and experience suggests, a good criteria from 10 years ago may not work well today.
Canada is really becoming more like the States when it pertains to lawsuits. With more lawyers getting involved with personal injuries, it’s really imperative for a fleet to revisit how they are doing things.
Criteria for a Comprehensive WSIB Solution
- Short term benefits: Look for something with a long “Own Occupation” definition,preferably at least five years. Some programs provide benefits that are payable for five years, but may only have a one- or two-year Own Occupation definition. On the surface,these programs may seem to be okay, but after the one- or two-year period is up, the O/O may be forced back to work if they can do any other occupation, and benefits could cease. If the O/O is still truly injured, they may have the option of coming back to the fleet looking for more.
- Long term benefits to age 65 or 70: This is often a benefit that has been overlooked. Because of some of the issues above, more fleets are now requiring their O/O’s to invest in a program that includes not only short term benefits (with a PTD benefit), but also a long term disability benefit that is payable to age 70. This approach is a much better way of reducing risk and exposure, plus, it’s the right thing to do for the O/O and his/her family.
- At least 60 days for strains/sprains (with no lifetime maximum): A strain or sprain is the number one injury for this type of coverage, and more than half of these claims go beyond 30 days on average.
- $300,000 Accidental Death and Dismemberment: We don’t like to think about this, but if an O/O is killed, the family will need to replace the O/O’s income for years to come (so the more the better).
- $300,000 Permanent and Total Disability (in addition to the Age 70 benefit described above): This will help cover some of the extra expenses incurred if the injury is catastrophic.
- Accident Medical Benefits: physio, medical appliances, prescriptions drugs, etc. (the more the better).
- The program should also include benefits for rehabilitation, education benefit and spousal retraining.
- Ensure the policy you chose is a “first payor” policy, not directing claims to other insurance first.
The other “debate” seems to come down to: what is better coverage, individual or a group policy? Because of past challenges which have occurred in our industry, we now always recommend that the O/O only invest in individual coverage. Although there are group type programs available that may save a few dollars, a group policy is owned by the carrier and may be one of those items that tip the scale if an O/O’s independent status is questioned. An individual policy is generally non-cancellable by the insurer and is portable, meaning the O/O doesn’t lose their coverage if they leave a certain carrier.
Method of Payment: Is it better to let the O/O purchase coverage on their own or provide deductions through their operating statements? Both ways are acceptable, but having a comprehensive program through operating statement deduction not only reduces the carrier’s risk and liability, it will also save tremendously on administration, if done the right way. If O/O’s are purchasing coverage on their own, be sure to have them provide you with a copy of their policy as well as a current certificate of insurance each month (or quarterly at the least). Recommendation: Providing a comprehensive “individual program” through operating statement deduction is really the true way to ensure coverage has not only been purchased, but more importantly, maintained.
Winning the lottery is something only a few will experience in a lifetime. That means if we want our companies to be successful, we are going to have work at it and make wise business decisions, including choosing the right broker. If you have O/O’s and allow them to opt out of WSIB, be sure to choose a broker that specializes in WSIB Alternative Programs and will be there for you at the time of a claim. Just because someone has a license to sell insurance and has access to a “product” doesn’t make them an expert. Ask for references and check them. You wouldn’t hire an O/O without checking out their references thoroughly, would you?
Author: Glenn Caldwell is the Vice-President of Sales for NAL Insurance Inc. of London ON. For the last 24 years, Glenn has worked closely with many fleets across the country to ensure their Owner/Operators have the protection they need to keep rollin’. You can reach him @ 1-800-265-1657 or gcaldwell@nalinsurance.com